To define Fintech properly, we need to start with the numbers. The latest surveys tell us that in Italy alone, 11 million people tried at least one Fintech service in 2018, a figure which was up a huge 54% from the previous year (source: PoliMi Observatory).
What is this phenomenon, then? In its simplest terms, the term Fintech stands for Financial Technology, and encompasses all those companies and organisations who use the latest digital technology to offer or enable banking or financial services.
Oval, to us a household name, is part of the Fintech universe.
Fintech: the digital transformation of finance
To fully grasp how revolutionary this industry has been, we need to take a small step back. The evolution of digital technology and what it has brought with it has slowly made us, as consumers, highly demanding and constantly connected. When we buy a product we want it delivered the next day, and if something is wrong we want an immediate response to our complaints.
Slowly but surely, these expectations have now spilled over into the financial services industry. We now demand from the financial market, which has traditionally withstood change, the same speed, connectivity and interaction that we receive from all other areas of our digital lives. Take, for example, the way that customer relationships have changed with their banks: there may be many members from the older generation who recall mornings spent in their local branch in order to withdraw, pay or make transfers; digital natives, however, may well have never set foot inside a bank. And rightly so.
At its core, the Fintech phenomenon was born in response to two needs: one was to align financial services and activities with today’s hyper connected and interactive world; the second, and arguably the most important, was to create entirely new and innovative products.
It is no coincidence that most Fintech services are apps for mobile devices, that they have literally perfect user experiences and offer services that were almost inconceivable not so very long ago. Fintech, after all, is innovation in the world of finance, made possible by digital technologies and provided by companies that make agility, technical competence, and innovative business models their flagships.
Let's take Oval, for example: is the concept of accumulating digital savings on a weekly basis through fully customisable savings Steps not by its very nature innovative?
Would such a model have been possible 15 years ago? Probably not. Furthermore, as per the Fintech paradigm, its user experience is at its core. It puts the user at the center, allowing everything to be done with a simple click of a button, thereby utilising another cornerstone of this universe 2.0: automation. People save without having to do anything, invest by touching their screens, and withdraw money from their wallet in a matter of seconds: is this not the future?
Fintech: no limits to innovation
The beauty of Fintech is that there are no limits regarding the services that can be hypothetically offered: if you can dream it and you can make it, then you can offer it. A “social” payment system? Innovative money transfers? Data processing and monetisation based on AI algorithms? All one of a thousand things that might not yet be possible, but which may well soon be.
All this dreaming, however, must be fully regulated and controlled within the tight legal framework set forward by the EU Parliament and local national legislators. The recent PSD2 updates have taken important steps towards the breaking down of antiquated barriers and allowing new fintech companies to offer their innovative products to the world of finance in collaboration with traditional operators, ie banks.